MGNT 428 Chap 6

According to the ______ rule, increasing the surface area (size) of a storage unit or retail facility results in a disproportionate increase in volume (space).

cube square

Generic Business Strategies

differentiation and cost leadership

Which of the following situations would justify the use of manufacturing robots by a producer of packaged foods?

increase in demand

A ______ strategy requires achieving the lowest costs in the industry while maintaining a level of value that is acceptable to customers.

cost-leadership

What must strategic leaders keep in mind if they are going to achieve successful strategic positioning?

to achieve strategic positioning you have to make some tradoffs

In terms of productivity, which of the following is true of learning curves?

they go down

corporate level strategy

A plan that indicates in which industries and national markets an organization intends to compete.

By using a differentiation strategy, a firm aims to ______.

add unique features that will increase the perceived value of a product

business level strategy

an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets

When pursuing a differentiation strategy, a firm can achieve a competitive advantage by ______.

ensuring that its economic value exceeds that of its competitors

A ______ outlines the steps a manager will take to achieve competitive advantage in a single product market.

business-level strategy

A tablet manufacturer that includes a free stylus with every purchase is using ______ to enhance users' experiences and increase the perceived value of its tablets.

complements

Value drivers known as ______ add value to a product or service when they are consumed in tandem with the focal product.

complements

Which value driver would be the focus of a company that sells products that are similar to competing products and that provides a 60-day guarantee with no questions asked?

customer service

A struggling retailer seeking to implement a blue ocean strategy is likely to experience difficulty with ______.

cutting costs and increasing value at the same time

Economies of scale are ______.

decreases in cost per unit as output increases

The concept of a(n) ______ attempts to combine both learning effects and process improvements.

experience curve

An auto manufacturer that has access to cheaper labor and raw materials than its rivals will have a competitive advantage regarding lower cost of ______ factors.

input

A firm's strategic profile based on value creation and cost is called its ______.

strategic position

A firm's strategic position is determined by the relationship of which two variables?

value creation and cost

Which of the following accurately describes the relationship between value and cost that would suggest that firm A has created a competitive advantage over firm B?

(V-C)A > (V-C)B

In addition to having the lowest cost, a low-cost leader is likely to have ______.

a large market share

Which of the following scenarios would result in strengthening a firm's strategic position?

a new product is added that increases the perceived value of a product at a minimal cost to the firm

Input factors

raw materials, capital, labor, IT services

A firm that manages to avoid competition entirely by offering a product or service that creates an uncontested market space is engaging in ______.

value innovation

A company with a cost-leadership strategy faces significant difficulties when _____.

when the focus of competition shifts from non-price to price attribute

Why does the learning curve go down when productivity is considered?

As workers repeatedly engage in an activity, they become more efficient, driving down costs.

Which of the following best exemplifies a company that successfully uses a differentiation strategy?

Company X strengthens its brand by marketing a product with an innovative feature.

What is one of the benefits of pursuing a differentiation strategy when it comes to the power of suppliers?

Differentiation provides protection against an increase in input prices.

Business-level strategy addresses which overarching question?

How should we compete?

Which capability is required to create superior product features?

R&D

What is the relationship between fixed costs and economies of scale?

The amount of fixed costs allocated to each unit of output decreases as output increases.

Which type of strategy is being used if a company offers a product at a lower cost than its competitors?

cost-leadership strategy

A(n) ______ strategy attempts to increase the perceived value of a product while controlling costs.

differentiation

A successful blue ocean strategy requires strategists to reconcile the trade-offs between ______.

differentiation and cost-leadership

Positive adjustments in product features, customer service, and complements may enable managers to ______.

improve the firms strategic position

Two important features that managers can adjust in an effort to improve the firm's strategic position are ______.

product features and customer service

Products in the affordable "business-casual" clothing market have largely become commoditized, and most retailers have begun to compete mainly on price rather than product features. In this environment, it is impossible for one retailer to gain market share without another losing it. This is an example of a ______ ocean.

red ocean

A manufacturer of electronic components can use its manufacturing machines to produce many different components such as semiconductors, sensors, and capacitors. In this case, the firm benefits from an economy of ________reducing overall production costs by finding multiple uses for its components and facilities.

scope

Economies of scale present an opportunity to increase profits because as the number of units within the relevant range increases, fixed costs ______.

stay the same

The perceived value that a company creates for consumers less the company's costs to create the value equals ______.

the economic value created

Different value drivers contribute to competitive advantage only if ______.

the increase in perceived value exceeds the corresponding cost increase

Why do many firms fail to successfully implement a blue ocean strategy?

they end up stuck in the middle

How to compete on a business level is defined by the variables value and cost. Together they define the ______.

economic value created

Which of the following are examples of ways that a large retailing firm can increase the perceived value of its offerings by focusing on customer service?

-domestic call center -"no questions asked" return policy

Larger output allows firms to invest in more specialized systems such as ______.

-enterprise resource planning software -manufacturing robots

A firm that increases its output of a given product and experiences a simultaneous decrease in per unit costs is taking advantage of ______.

economies of scale

If two firms produce very similar products at the same rate of output, and firm A is able to achieve lower per-unit costs than firm B by taking advantage of a new manufacturing technology, firm A is benefiting from

experience curve based on process innovation

economies of scope

savings that come from producing two or more outputs at less cost than producing each output individually.

A producer of consumer headphones that successfully differentiates its products with a patented noise-canceling technology and celebrity endorsements will enjoy which of the following benefits?

-less competition -abilityto charge a premium

Which competitive forces can result in erosion of margins for both differentiation and cost-leadership business strategies?

-supplier power -buyer power -threat of entry

The cube-square rule makes it _______ for smaller stores to compete with larger retailers.

harder

In terms of business strategy, blue oceans represent which of the following? (Check all that apply.)

untapped market space and increased demand

Which of the following are significant threats to a firm pursuing a cost-leadership strategy?

replacement by innovative substitutes competitors adopting similar business strategies value falling below the acceptable threshold

A cost leader can achieve a competitive advantage by ______.

reducing costs below those of competitors while maintaining a similar value

Unique features and attributes that differentiate a product from competitors' offerings allow the firm to ______.

charge premium pricing